Ford, GM and Chrysler Warn Weak Yen is Aiding Japanese Profits

[jpd80]

LINK to Autonews

 

The yen has fallen 17 percent against the dollar since Oct. 31 as

Shinzo Abe, who became Japan's prime minister in December,

advocated for the decline to improve the country's economy.

The currency's slide gives Toyota and other Japanese

automakers a financial gain on every car, which they can

use to cut prices, boost ads and improve products.

 

Morgan Stanley estimates the currency boost at $1,500 per car,

while the Detroit automakers contend the figure is $5,700 per vehicle.

"We're concerned about what the long-term ramifications are,"

Joe Hinrichs, Ford Motor Co.'s North American chief, said last month

at a Cleveland engine factory the automaker is expanding.

"Our workers and our businesses should not be disadvantaged by

governments intervening in currencies."

 

Asked about the swooning yen this month at the Geneva auto show,

Sergio Marchionne, CEO of Chrysler Group LLC and Fiat SpA, told

Bloomberg Television: "We didn't need this, to put it bluntly.

It's going to make life tougher."

 

The yen's impact is already falling to the bottom line.

Toyota last month raised its profit forecast by 10 percent for the fiscal

yearending March 31, to 860 billion yen ($9 billion), a five-year high.

That would more than double the previous year's profit and signal a

complete comeback from the global recalls and 2011 Japanese

earthquake that shook Toyota's standing as a leader in earnings,

sales and quality.

 

"Ever since the new government took control, it feels as though Japan

is filled with the spirit for economic revival," Toyota Senior Managing Officer

Takahiko Ijichi said Feb. 5, the day the company boosted its forecast.

"Some say that they can't feel any real substance in the whole 'Abenomics'

phenomenon, but as a result, it's weakened the yen and boosted stock prices."

 

 

Detroit's surge

Toyota's currency tailwind comes as Detroit is experiencing its own surge.

GM, Ford and Chrysler are expected to sell about 6.76 million cars and trucks

in the United States this year, the most since 2007, according to the average

of six analysts surveyed by Bloomberg.

 

An overhauled lineup of sedans will drive Detroit's share of the U.S. small and

mid-sized car market up to 33 percent next year, from 26 percent in 2009,

according to researcher LMC Automotive.

 

Detroit automakers say they fear that it's like the 1990s and 2000s all over again,

when a weak yen enabled Japanese automakers to offer cars loaded with extra

features at prices the U.S. companies couldn't match. It took government-backed

bankruptcies at GM and Chrysler in 2009 and a wrenching restructuring at Ford

to get their costs in line with Toyota.

 

Now, Detroit's gains are being eroded, said Adam Jonas, auto analyst with Morgan Stanley.

"This is, without a doubt, the biggest change affecting the global auto industry," he said.

"The dollar versus the weak yen will make the Japanese automakers richer and they

can use those profits to target more-aggressive growth. Ford and GM are in their bulls-eye.

This is a real threat."

 

Most to gain

Toyota has the most to gain because it exports more than 2 million vehicles from

Japan annually, which now become more profitable when sold in the U.S. or Europe,

according to a Feb. 27 report from Deutsche Bank entitled "Re-rising Sun?"

 

About 27 percent of the models Toyota sells in the United States are imported,

compared with 10 percent by Honda Motor Co., Deutsche Bank said.

"We see Toyota as having the most to gain from a weaker yen with improved profits

on exports of over 2 million units driving net margins from a lagging to leading position,"

wrote Deutsche Bank analysts Jochen Gehrke and Kurt Sanger, who see Toyota's

net profit margin topping 6 percent next year, up from 1.5 percent in the year ended

March 31, 2012.

 

Toyota's net margin in its latest fiscal year was the worst among global automakers with

a market value of more than $10 billion, according to data compiled by Bloomberg.

Honda had a net margin of 2.7 percent in the year ended March 31, 2012, while GM's

net margin was 4.1 percent in its fiscal year ended in December, the data show.

Edited March 16, 2013 by jpd80

[Fgts]

Japanese manipulating their money for better profits?, such lies..................

 

Meanwhile instead of tackling this our government is interested in more spending cut and makes sure Jim and bob can poke each other with that gay rights crap...

Edited March 17, 2013 by Fgts

[Hydro]

no, no ,no.... toyota & honduh are American companys "says the vast majority of car shoppers" .

[jpd80]

The nett effect is that a lot more money flows out of the country than should and one industry on its own may not influence, but

try multiplying that effect across broader industrial activity and you get a picture of what Japanese currency manipulation is doing

[silvrsvt]

I don't get what they are complaining about....the current yen exchange rate is roughly 92 yen to the dollar...back about 10 years ago it was closer to 114 yen to the dollar! The Exchange rate sucks now if your buying items from Japan vs what it used to be.

[jpd80]

I don't get what they are complaining about....the current yen exchange rate is roughly 92 yen to the dollar...back about 10 years ago it was closer to 114 yen to the dollar! The Exchange rate sucks now if your buying items from Japan vs what it used to be.

The Japanese government is manipulating the value of the yen to make it weaker to assist Japanese exports to the USA.

If they adn't intervened, the Yen would be stronger and Japanese companies less likely to sell as much in the USA..

[Noah Harbinger]

I don't get what they are complaining about....the current yen exchange rate is roughly 92 yen to the dollar...back about 10 years ago it was closer to 114 yen to the dollar! The Exchange rate sucks now if your buying items from Japan vs what it used to be.

 

It depends what time scale you're looking at. In late '11 it was down to about 76 yen per dollar, and around 78 last summer. That's a darn big change for just a few months. But it is certainly true that America's weak-dollar policy has been helping US manufacturing for some time.

 

I shudder to think of the potential outcome of every major economy engaging in a race-to-the-bottom to devalue their currency to gain an edge in the international markets…

[Noah Harbinger]

no, no ,no.... toyota & honduh are American companys "says the vast majority of car shoppers" .

 

And apparently reality as well.

 

"About 27 percent of the models Toyota sells in the United States are imported, compared with 10 percent by Honda Motor Co.,"

[tzach]

Building the cars here does not make them an American company, the profits flow out of the country. They portray themselves as American companies so people will not feel like they are not being unpatrotic by buying there cars. But we have no one to blame but ourselves for the situation we are in. We allowed this to happen and have hed many chances over the last thirty years to stop it. But the big three can never all keep enough consistency in continual improvement and that added to the perception factor and other varying issues have hurt this country. As has the loss of manufacturing jobs in all industries. And our Government is to busy fighting among themselves like 10 year olds and getting themselves rich and ignoring the unbelievable waste and corruption that goes on at all levels to do anything about the overall decline of this country.

[twmalonehunter]

Building the cars here does not make them an American company, the profits flow out of the country. They portray themselves as American companies so people will not feel like they are not being unpatrotic by buying there cars. But we have no one to blame but ourselves for the situation we are in. We allowed this to happen and have hed many chances over the last thirty years to stop it. But the big three can never all keep enough consistency in continual improvement and that added to the perception factor and other varying issues have hurt this country. As has the loss of manufacturing jobs in all industries. And our Government is to busy fighting among themselves like 10 year olds and getting themselves rich and ignoring the unbelievable waste and corruption that goes on at all levels to do anything about the overall decline of this country.

Why did you have to go and insult 10 year olds....

[tzach]

Sorry! I apologize to 10 year olds everywhere for my insult.